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2015 (4) TMI 1346 - AT - Income TaxNature of receipt - Carbon Emission Reduction Units - Revenue Receipt OR Revenue receipt - CIT(A) deleted the addition which was made by the AO by denying the benefit of deduction claimed by the assessee was not “derived from” the eligible business of the assessee - HELD THAT:- The facts of the case are identical to the facts of the case decided by Hyderabad Bench of the Tribunal in the case of My Home Power Ltd [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] carbon credit was in the nature of “an entitlement” received to improve world atmosphere and environment reducing carbon, heat and gas emissions. It was not an offshoot of business but an offshoot of environmental concerns. No asset was generated in the course of business. Credit for reducing carbon emission or greenhouse effect could be transferred to another party in need of reduction of carbon emission. It does not increase profits in any manner and does not need any expenses. In the nature of entitlement to reduce carbon emission, and there was no cost of acquisition or cost of production to get this entitlement. Carbon credit was not in the nature of profit or in the nature of income. The amount realized on transfer of carbon credit was not taxable. This decision has been followed by Chennai Bench in two cases of Ambika Cotton Mills Ltd [2014 (3) TMI 428 - ITAT CHENNAI] and Sri Velayudhaswamy Spinning Mills P. Ltd [2015 (4) TMI 132 - ITAT CHENNAI]. Even Jaipur Beach has followed this decision in the case of Shree Cement Ltd [2015 (3) TMI 759 - ITAT JAIPUR] No doubt the DR has been able to point out the contrary decision rendered by Cochin Bench of the Tribunal in the case of Apollo Tyres Ltd [2015 (3) TMI 760 - ITAT COCHIN]. Since the decision of Hyderabad Tribunal Bench has already been confirmed by the Hon'ble Andhra Pradesh High Court and there is no contrary decision from any other High Court, in our opinion, we are bound to follow the decision of High Court. Therefore, following this decision we decide this issue against the Revenue. Deduction u/s 80-IA - Receipt as ‘insurance receipt’ which was disallowed AO since the same was not “derived from” the eligible business of the assessee - HELD THAT:- This issue has not been discussed in detail by Assessing Officer and CIT(A) in their respective orders. Therefore, if it is a case of refund of only insurance premium then assessee would be entitled to deduction u/s 80IA on this amount also. However, this fact need to be verified, therefore, we set aside the order of Ld. CIT(A) and direct the Assessing Officer to verify the nature of insurance receipts and if the same was in the Revenue field, then deduction u/s 80IA should be allowed otherwise the issue may be decided in accordance with law. Allowance of deduction u/s 80IA in respect of interest subsidy - The effect of the interest subsidy would be that normal interest expenditure would get reduced because of this subsidy. This in turn would lead to increase in normal profits which would entitle to deduction u/s 80IA, therefore, in our opinion, the Ld. CIT(A) has correctly decided this issue and we confirm his order. Thus the appeal is partly allowed for statistical purposes.
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